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Mumbai, Nov. 7 Fearing money laundering through pre-paid payment instruments such as gift cards/vouchers, travel/expense cards, food coupons, telephone calling cards, etc, the Reserve Bank of India has indicated that it may subject these instruments to tighter safeguards by applying Know Your Customer (KYC)/ Anti-Money Laundering (AML)/ Combating of Financing of Terrorism guidelines on such issuances.

This would mean companies giving their employees pre-paid cards meant for food coupons, which can also be used for buying provisions at stores/shopping malls, as part of employee welfare measures may now be required to maintain full details of the persons using them!

An Approach Paper on Guidelines for Pre-paid Payment Instruments put together by the RBI has indicated that non-bank entities issuing such cards to companies would have to ensure compliance in this regard.

Similarly, travel cards/expense cards issued to companies for onward issue to their employees could also be in for the same treatment.

As per the Approach Paper, gift cards and travel cards too would be subjected to higher safeguards such KYC/ AML/ Combating of Financing of Terrorism guidelines based on their features and vulnerability to misuse.

In these cases, identifying the customer to whom the card has been issued, keeping his address particulars and maintaining transaction logs would be necessary to safeguard against money laundering.

Barring Semi-Closed System Payment Instruments (payment instruments which are redeemable at a group of establishments associated with a particular shopping mall, tourist resorts etc. or at establishments and service providers listed out by the issuer), all other pre-paid instruments will have to carry out KYC of the pre-paid instrument holders.

Entities issuing pre-paid instruments should maintain a log of all the transactions undertaken using these instruments.

These data should be available for scrutiny by the RBI or any other agency / agencies as may be advised by it.

These entities should also file Suspicious Transaction Report (STR) to Financial Intelligence Unit – India (FIU-IND).

Semi-Closed System Payment Instruments up to Rs 500/- may be to be issued without any KYC, subject to reporting of annual/suspicious transactions.

More Stories on : Credit Cards & Debit Cards | RBI & Other Central Banks | Economic Offences

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